Free Republic

The financial system and economy are coming back to life. So who's going to pay TARP back and who isn't? As the first anniversary of the government's $700 billion Troubled Asset Relief Program approaches, Treasury Secretary Timothy Geithner has a lot to be happy about. Thursday, facing the congressional panel charged with overseeing the TARP funds, Geithner reminded them that when he took office, the Treasury had given $240 billion to banks. Since then, $70 billion has come back as the healthiest banks have begun to repay taxpayers. He estimates banks will repay another $50 billion over the next 12...

who screwed America...Bush was clueless and intimidated by Treasury Secretary Hank Paulson, according to a GW speechwriter. Here they come, the Bush year tell alls. A GW speechwriter, Matt Latimer, is the first one out of the gate spilling the dirt, and does he have dirt: The secretary of the treasury, Hank Paulson, had sketched out a dire scenario... we’d have to write a speech for the president announcing his “bold” plan to deal with the crisis. (The president loved the word bold.) We had to reassure the American people that everything was going to be okay. As it turned...

If only. Lawrence McDonald begins his insider’s account of the fall of Lehman Brothers with seven “what if” scenarios, speculating on how different decisions might have saved his former employer. If only Dick Fuld, Lehman’s chief executive, had listened to those who warned of impending losses on the bank’s property portfolio. If only Fuld had not antagonised Hank Paulson, the then Treasury secretary. And so on.* Mr McDonald is far from the only person who believes that the Lehman bankruptcy could have been avoided. Alan Blinder, the former Federal Reserve vice-chairman, has called the decision to let the bank fail...

A BBC production of the last days of Lehman Brothers is a must see. You have to read between the lines a bit, but the production shows how Treasury Secretary Paulson treated Lehman different from the way he handled others that had just as many problems as Lehman. In a nice touch, the BBC hints that Paulson tipped off former Goldman man, and then Merrill CEO, John Thain, of the trouble ahead----which was behind Merrill's sale to Bank of America. The dramatization does a nice job of showing Thain's style in landing an incredible $29 per share for Merrill from...

President Obama is speaking tonight, apparently to assure us all that his administration has the financial crisis resolved. Don’t bet on it. To see why, let me take you back a couple of years. In the fall of 2007, facing billions in losses on Merrill Lynch’s holdings of toxic assets, then-CEO Stan O’Neal approached his board at least twice to sell Merrill or merge it with a major bank — and at least twice got rejected. Merrill was bleeding, he warned, and might not survive the huge losses on its balance sheet. The board’s response: No way. The firm would...

Sunday’s Washington Post reports that “J.P. Morgan Chase for the first time convened its board in Washington this summer, calling the directors to a meeting at the downtown Hay-Adams hotel, then dispatching them to Capitol Hill for meet-and-greets,” highlighting the bed-sharing between State and economy in an article titled, “In Shift, Wall Street Goes to Washington: District Rises as New Financial Center”.“Fascism should more properly be called corporatism because it is the merger of state and corporate power.” –Benito MussoliniDavid Cho, Steven Mufson and Tomoeh Murakami Tse report:As financial firms navigate a life more closely connected to government aid and...

The cash-for-clunkers program was so successful in getting Americans to buy new cars that it ran out of money early. Now, a sequel, dollars-for-dishwashers, is coming to an appliance store near you. But the $300 million program, funded through the federal government's economic stimulus plan, is certain to lack the same pop, said appliance makers and retailers. The program's intent is to spur sales of energy-efficient appliances, but its small size would provide just a minor boost for struggling appliance makers such as General Electric Co., Whirlpool Corp., and Sweden's Electrolux AB. Unlike the clunkers plan, the program allows each...

Washington, D.C. (AHN) - The government will soon begin to pull back on some support for financial markets, U.S. Treasury Sec. Timothy Geithner told a congressional oversight panel Thursday afternoon. Geithner said in testimony that the country had moved away from the edge of financial disaster and appeared to moving in the right direction. The Treasury is withdrawing its request for $750 billion more in bank rescue funds that had been included in the 2010 budget request. He said the government will require banks to hold more capital. Since the Bush administration created the Troubled Asset Relief Program in 2008,...

Much of the money given to General Motors and Chrysler to prevent them from collapsing will never be recovered, according to a report released Wednesday by the Congressional Oversight Panel.

In the last decade, we have witnessed the bursting of two bubbles, the stock market bubble driven by internet stocks with unsustainable business models and valuations, and more recently, the private debt bubble that has resulted in the destruction of credit along with real estate values. America is now engaged in the unprecedented growth in government accompanied with unprecedented debt at the federal level. The Federal Reserve in cooperation with both the Bush Administration in its final days and now the Obama administration is propping up the credit markets with over $1.0T including the TARP funds, and open market purchases...

Alistair Darling is scrambling to plug a gaping hole in the $1.1 trillion global rescue package agreed by G20 leaders in London — hailed at the time as Gordon Brown’s biggest success. Some countries, led by Germany, are even calling for the bailout to be scaled back amid fears that it risks burdening economies with too much debt and could encourage inflation. The breakdown of unity reflects the different speeds at which countries are emerging from recession and conflicting views about the outlook for the global economy. The differences also extend to the kind of capitalism that leaders want to...

Charging a bank for an implicit government guarantee to absorb losses? According to the Wall Street Journal, the Federal Reserve and Treasury are demanding that Bank of America pay $500 million to exit a bailout deal that was never actually signed. That’s a nice chunk of change, but taxpayers shouldn’t be fooled into thinking this — or any other bailout — is a good deal. A very dangerous misconception is taking root in the press, that in addition to saving the world financial system, the bank bailout is making taxpayers money. “As big banks repay bailout, U.S. sees profit” read...

The Federal Housing Administration, hit by increasing mortgage-related losses, is in danger of seeing its reserves fall below the level demanded by Congress, according to government officials, in a development that could raise concerns about whether the agency needs a taxpayer bailout. The rising losses at the FHA, part of the U.S. Department of Housing and Urban Development, come as the agency has rapidly increased its role in guaranteeing loans in an attempt to stabilize the housing market. It isn't clear how the rising losses may affect home buyers. Options for the agency could include politically unpalatable choices, such as...

Almost every Friday since January, the Federal Deposit Insurance Corporation (FDIC) has added more names to its “failed bank list”—84 so far this year, already more than the 26 for all of 2008. America should be proud of this document, which seems an example of the prudent regulation integral to free markets. But the FDIC’s elegant system, which both ratifies the markets’ discipline of bad banks and protects broader markets from depositor panic, has become a tool of the government distortion that imperils our competitive economy.

August auto sales got a boost from the government’s Cash-for-Clunkers program, although results for American car makers were underwhelming. “Of all of them, Ford managed a 17% gain… Analysts continue to think Ford might be being rewarded by consumers for not taking bailout money.” WATCH VIDEO...

I thought I had seen it all when it comes to dumb. I was wrong. video at site This is idiotic. Let's count the ways: A "strong regulator" eh? You mean like the FHFA? Fannie and Freddie had a so-called "strong regulator" that nonetheless allowed them to lever up at 80:1 (or 200:1 depending on how you looked at their books) which was clearly outrageous on its face and led to their demise. That same "strong regulatory framework" had Fannie and Freddie buying other-than-actual-prime paper. It detonated. Any questions? Fannie and Freddie turned into revolving-door agencies with the government, winding...

A mortgage-industry trade group is calling for Congress to transform Fannie Mae and Freddie Mac into several smaller privately held companies that would issue mortgage securities carrying an explicit government guarantee. Some foreign investors in China and elsewhere lost confidence in that fuzzy implied guarantee last year and reduced their holdings of the companies' debt, though the U.S. government has propped up Fannie and Freddie with capital infusions. "If we're going to restore and maintain investor confidence and...consistent liquidity, that is going to require an explicit backstop," said John Courson, chief executive and president of the MBA. Shares of both...

LITTLE ROCK — The Catholic Diocese of Little Rock announced today it has been awarded a $151,500 grant to provide services to immigrant crime victims across Arkansas. The U.S. Department of Justice provided the funding to Arkansas under its STOP (Services, Training Officers and Prosecutors) Violence Against Women program, created by the federal Violence Against Women Act of 2005. The state Department of Finance and Administration awarded the two-year grant to the diocese. The money will be used to create a Crime Victim Services Unit under the diocese’s immigration services program. Two additional employees will be hired to provide education...

Among the servicers participating in the government’s mortgage modification program is a new recruit that’s not like the others. PennyMac, a firm founded by the former president and chief operating officer of Countrywide, buys distressed home loans on the cheap with the goal of modifying them and later selling them for a profit. The company, whose top management consists mostly of former Countrywide executives, now stands to receive up to $6.2 million in taxpayer money to modify those loans, through the Making Home Affordable program. The government’s incentive payments go primarily to the participating servicer, but some of the money...

The biggest spur to deal-making among banks isn't private-equity cash or foreign investors. It is the federal government. To encourage banks to pick through the wreckage of their collapsed competitors, the Federal Deposit Insurance Corp. has agreed to assume most of the risk on $80 billion in loans and other assets. The agency expects it will eventually have to cover $14 billion in future losses on deals cut so far. The initiative amounts to a subsidy for dozens of hand-picked banks. Through more than 50 deals known as "loss shares," the FDIC has agreed to absorb losses on the detritus...

When a banks’ loans begin to non-perform, they begin to eat into their capital reserves. Each banks’ Board of Directors is responsible to assess their reserves and make certain that they comply with legal and accounting requirements and, of course, they are certainly free to maintain standards that are higher than minimums. The Fed tracks the banks’ Allowance for Loan and Lease Losses (ALLL) and produces charts showing ALLL versus NONPERFORMING loans. A ratio of 100 would mean that all the banks in that size have ALLLs that exceed their nonperforming loans – a condition of health. The lower the...

This morning I woke up to the media once again "spouting" about how the government had "made money" on the bank bailouts. MSNBC was spouting the mainstream lie, with the following from the NY Times: Nearly a year after the federal rescue of the nation’s biggest banks, taxpayers have begun seeing profits from the hundreds of billions of dollars in aid that many critics thought might never be seen again. The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent...

NEW YORK (Reuters) - Millions of Americans have already seen their credit card limits shrink, and millions more face the same fate as lenders prepare for tougher U.S. consumer protection rules. Since the financial crisis deepened a year ago, credit card companies have been closing millions of inactive accounts, cutting credit limits and raising interest rates to cushion themselves from record loan losses. This is just the beginning of the biggest shake-up in the credit card industry in at least 20 years, analysts said. . . . . . Going forward, credit card companies will purge customers rather than risk...

(8/27/2009) Toytoa announced today it will end production at Fremont, California’s New United Motor Manufacturing Inc., better known as NUMMI, in March 2010. Before today’s announcement, California lawmakers and Gov. Arnold Schwarzenegger have appealed to Toyota to save Nummi and its 4,600 jobs, a majority of which are represented by the United Auto Workers union. The NUMMI plant, established in 1984, employs 4,600 workers.

The subprime lenders that helped send the financial system -- and broader economy -- into a tailspin are now getting billions of taxpayer dollars to help fix the housing crisis. A new report by the Center for Public Integrity shows Washington is subsidizing them in what could be the next major credit bubble: CPI: Firms that fed off the subprime lending frenzy that devastated the banking system are lining up to collect more than $21 billion in taxpayer funds meant to help bail out borrowers now in trouble on their loans. The funds come from the federal government’s Home Affordable...

video 6:25

1) Who is most to blame for America’s current economic crisis? Clinton Administration and the Democrats in Congress The Bush Administration Wall Street Banks and sub-prime lenders Real estate and mortgage professionals Investors Home buyers

The worst is over and we can all rest assured that the economy will recovery thanks to Barack Obama and the Federal Reserve. The good news is that they can give back all the money that they allocated to help get us out of this recession. CNN reports that even after all of the bailouts, stimulus, and TARP funds the government handed out, it did not have to spend $8.2 of the $11 trillion allocated. And, of course, every American (man, woman, and child) would enjoy the roughly $27,000 each citizen would get if Congress simply gave the allocated money...

Now JPMorgan is using its government muscle to distort and limit pay scales in its industry, A JPMorgan employee received a job offer with higher pay from a competitor. He took the job. JPMorgan called in the government to stop him from getting the higher pay. Reports FT: JPMorgan asked the [the UK's] Financial Services Authority to review a multi-million pound compensation package being offered to lure one of its star proprietary traders to rival Barclays Capital, the investment banking arm of Barclays... JPMorgan contacted the FSA over concerns that the package was excessively risky and would distort the market...

A mortgage finance company owned by Wall Street bank Goldman Sachs (GS.N) could garner $775 million in government rescue funds if the company aggressively eases the terms of failing home loans, the U.S. Treasury said on Friday. Litton Loan Servicing collects monthly mortgage payments on behalf of investors and must decide what to do with homeowners who default. Under President Barack Obama's housing rescue plan, mortgage service companies can receive cash payments if they successfully steer a borrower away from foreclosure. Based on the size of their mortgage holdings, Litton could be eligible for as much as $775 million in...

Here we go! Colonial, Alabama’s second-largest bank, is being closed by regulators today, the person said, becoming the largest U.S. bank failure of 2009 after an expansion into Florida saddled the lender with more than $1.7 billion in soured real-estate loans. The FDIC usually waits until the close of business Friday; they must have had a slight problem with withdrawals...... Left unsaid is what's going to happen to the FDIC's deposit insurance fund on this one - my guess is that it will be ugly, as these guys were up to their necks in Florida on development projects that went...

Judicial Watch, the public interest group that investigates and prosecutes government corruption, announced today that it has uncovered documents from the Treasury Department related to the government's bailout of insurance giant American International Group (AIG). The documents, obtained through the Freedom of Information Act, include internal Treasury Department emails and a series of outlines, presentation slides and articles outlining the details of the government's "investment" in AIG, which at the time totaled as much $152 billion. Following are highlights from the documents: A series of presentation slides detailing the terms of the AIG bailout. Included among the items is a...

Something we have always known, animals are smarter than people.

<p>Although hundreds of well-trained eyes are watching over the $700 billion that Congress last year decided to spend bailing out the nation's financial sector, it's still difficult to answer some of the most basic questions about where the money went.</p>

LEWISTON - Maine's Democratic Party rode several large donations to a healthy fundraising advantage over Republicans early in this election year. In financial disclosure forms filed Wednesday, Democrats reported raising more than $199,000, compared to $105,000 by Republicans for the period between April 1 and June 1. Reports from candidates, political action committees and parties were all due Wednesday. Large donations - several from out-of-state interests - accounted for the vast majority of the Democrats' fundraising. Of the $199,000 total, $179,000 came from contributions of $5,000 or more. The Republican Party reported just seven contributions of more than $2,000, accounting...

However, Free Press, at this May 14 summit, didn't say one word about the well-documented liberal bias that has contributed to the decline in readers and viewers for traditional media outlets and has enabled the rise of the Fox News Channel, conservative talk radio, and the Internet. Instead, Josh Silver of Free Press attacked the "bellowing ideologues" on the air and declared that "The entire dial is empty of local news in many communities." New Strategy This was a tip-off that, in order to take conservative radio hosts off the air, the Federal Communications Commission (FCC) will be flooded with...

Bottom line: he was in touch with Goldman a lot. While Mr. Paulson spoke to many Wall Street executives during that period, he was in very frequent contact with Lloyd C. Blankfein, Goldman’s chief executive, according to a copy of Mr. Paulson’s calendars acquired through a Freedom of Information Act request. During the week of the A.I.G. bailout alone, Mr. Paulson and Mr. Blankfein spoke two dozen times, the calendars show, far more frequently than Mr. Paulson did with other Wall Street executives. On Sept. 17, the day Mr. Paulson secured his waivers, he and Mr. Blankfein spoke five times....

President Obama's compensation czar has been meeting for weeks with executives at some of the country's largest and most troubled companies as they face a Thursday deadline to propose how much they will pay their top employees. Kenneth R. Feinberg has the unprecedented task of deciding executive compensation at seven companies that received large government bailouts. His meetings with American International Group, Citigroup, Bank of America, General Motors, Chrysler, Chrysler Financial and GMAC have been conducted in secret, with neither Feinberg nor the companies willing to say much in public.

In a series of articles published from 1902-1904, Ida Tarbell attacked Standard Oil, the leading US supplier of kerosene lamp fuel. The centerpiece of Ms. Tarbell's criticism was that the company had engaged in predatory pricing by continually lowering its prices. Her readers must have asked themselves, "How is that a bad thing? Am I supposed to be outraged that the amount I pay for lamp oil has fallen?" Although company cofounder John Rockefeller had retired from actively managing Standard Oil in 1896, Ms. Tarbell vilified him in her articles, even criticizing his elderly appearance. Populist US president Theodore Roosevelt...

We have all heard plenty about Government Sachs but very little about BO supporter Warren Buffet. Since this WELFARE QUEEN just made another Fortune I thought you should see this. As a side note remember when Durbin said "Frankly the banks own the place?" He should know a thing or two about that on a personal level! Berkshire Hathaway Inc.'s earnings picked up sharply in the second quarter, reversing a first-quarter loss as the company rode a wave of gains in its vast stock portfolio. The Omaha, Neb., conglomerate run by Warren Buffett posted net income of $3.3 billion, or...

— President Barack Obama meets this weekend with leaders of Mexico and Canada at a time when drug-related violence, swine flu and the economic crisis are slipping across North America's borders like never before. Obama, along with Mexican President Felipe Calderon and Canadian Prime Minister Stephen Harper, are expected to work on trade and immigration, drug trafficking and security, and clean energy during their first summit Sunday and Monday in ....Guadalajara. "The bottom line is that what affects our bordering neighbors has the potential to affect us all, so we want to be certain that we have the tightest and...

Lloyd C. Blankfein has a story about the cataclysm that nearly brought down all of Wall Street. It goes something like this: One by one, lesser banks were swept away by the financial storm of 2008. And as the floodwaters rose, no one, not even Goldman Sachs, seemed safe. The question, in Mr. Blankfein’s eyes, was how high the water would rise. But Washington stepped in with all those bailouts before the surge reached Goldman. The story, which was recounted by several friends and colleagues, represents a sobering private admission from Mr. Blankfein, Goldman’s chief executive. Publicly, it is a...

<p>The $3.5 tn commercial real estate market is eroding, defaults are doubling on loans for apartment buildings, office buildings, housing complexes, strip malls, hotels, hospitals, and a staggering amount of loans must be rolled over this year into refinancings, or else go bellyup.</p>

The inspector general for TARP -- the government's $700 billion bailout of the financial industry -- says lawmakers asked regulators to fund certain banks, but found no evidence that outside lobbying influenced decisions. As CNNMoney.com reports: "Barofsky found 56 instances in which outside parties contacted regulators. Of those 56 firms, 16 got bailouts. And three of those 16 companies did not meet standard bailout criteria, but received money after regulators found "mitigating factors" justifying help, according to Barofsky. The inspector general's report did not disclose the names of the banks examined or the people, including lawmakers, who lobbied on their...

The attack on Warren Buffett continues. The latest to jump on the pile is Karl Denninger. He makes the charge that Buffett may have taken advantage of taxpayers, when buying his stake in Goldman Sachs: ...was he really just making a bet? The evidence says otherwise; Warren's statements both at the time and later one made clear that he had every expectation, and perhaps even inside information, that the government would not allow these firms to fail. That is, he didn't make a bet - he jumped in front of the taxpayer, a form of legal "front running", to garner...

It seems my previous article has garnered a bit of criticism from someone I hold in rather high regard, indicating that perhaps I have been less than clear in my criticism. Let me be clear: There is nothing wrong with making a lot of money, and leveraging your wealth into making even more money! It doesn't surprise me that those with lots of money get "special dispensation" in the form of conversations with Treasury Secretaries and other members of the government. The "little people" - that is you and I - will never get that sort of treatment, simply because...

The taxpayer-owned insurer, much derided for its blunders in the derivatives casino, becomes a highly sought-after lottery ticket. Less than a year after it nearly brought down the financial system with a misguided derivatives bet, AIG is everyone's favorite lottery ticket. Shares in the troubled taxpayer-owned insurer have nearly doubled in the days leading up to Friday morning's scheduled release of second-quarter earnings. It is a flurry of speculative enthusiasm that boggles the mind. Yes, the New York-based company is under new leadership, with former MetLife (MET, Fortune 500) chief Robert Benmosche due to take the reins from Ed Liddy...

...Fan and Fred also couldn't prosper for as long as they have without the support of the political left, both in Congress and the intellectual class. This includes Mr. Frank and Sen. Chuck Schumer (D., N.Y.) on Capitol Hill, as well as Mr. Krugman and the Washington Post's Steven Pearlstein in the press. Their claim is that the companies are essential for homeownership. Yet as studies have shown, about half of the implicit taxpayer subsidy for Fan and Fred is pocketed by shareholders and management. According to the Federal Reserve, the half that goes to homeowners adds up to a...

Wall Street banks and lawyers could collect nearly $1 billion in fees from the Federal Reserve Bank of New York and American International Group Inc. to help manage and break apart the insurer, according to a Wall Street Journal analysis. That would represent one of Wall Street's biggest paydays -- four times the fees paid to break up AT&T Corp. in 1996, and nearly double those paid for Visa USA's 2008 initial public offering, the largest U.S. IPO ever. The federal government's bailout of AIG has left it with a nearly 80% ownership stake. Wall Street banks and lawyers could...

Who doesn't love the image Warren Buffett projects in the media? The beloved stock-picker, with his mantra "buy smart, sell never", has become an American icon. He preaches the free market, capitalism, smart business practices and running a tight ship. He lives frugally in a modest home, doesn't flash his (extreme) wealth and claims that through hard work and dedication one can succeed in America. And now, Berkshire is set to report what may be the best quarter in his firm's history. The truth is somewhat different. Buffett has repeatedly used his influence to exempt himself from laws that apply...